Leni Gas & Oil Monday announced the conditional investment of 7.27% interest in gas development assets in Hungary from Ascent Resources plc.
Leni Gas & Oil plc has agreed terms with Ascent Resources to acquire a 7.27% interest in PetroHungaria kft and a 14.54% interest in ZalaGasCo kft.
PetroHungaria owns a 100% interest in the Peneszlek gas development project in the Nyirseg exploration permits in eastern Hungary, while ZalaGasCo kft has agreed the terms of a joint development agreement with MOL Hungarian Oil & Gas PLC ("MOL") which, on execution, will give it a 50% interest in the Bajcsa gasfield redevelopment project in western Hungary.
The cash consideration payable by LGO for the Hungarian Investments will, on the execution of the Operating Agreements and ancillary documents, total EUR2 million. EUR1 million has been paid to Ascent on entering the Investment Agreement, with the remaining balance of EUR1 million payable on completion.
The Peneszlek gas development project is centred on the development of the PEN-104 discovery that was drilled and tested by PetroHungaria in 2006. A workover rig has just finished completing and re-testing this well and the production facilities are scheduled to be delivered later this month.
The completion testing confirmed the productivity of the well and initial production will commence once the hook-up to the pipeline is completed and production authorisations received.
In addition to the planned tie-in of the PEN-9 and PEN-12 wells, further appraisal of the area will be undertaken with the acquisition of approximately 100 sq km of 3-D seismic including the area of the partially depleted Peneszlek field, which is a candidate for re-development.
The Bajcsa gasfield redevelopment project is a 50:50 joint venture with MOL. The project will undertake the redevelopment of the Bajcsa gasfield with the drilling of horizontal wells in to the proven productive gas reservoirs.
The first two wells are planned as re-completions of existing wells and the operations will commence as soon as the drilling permits are issued. Work has already commenced to enable access to the well sites.
These wells, because they were previously on production, are already connected to the field gas processing facilities and production can start immediately once these wells are completed.
As a further term of the Investment Agreement, Ascent and LGO have agreed to vary the arrangements for the option of up to a 40%. participating interest in Ascent's projects in Switzerland as announced on Oct. 25, 2007. Under the new terms Ascent has agreed to grant to LGO an option to acquire 10%. of the Seeland Freinisberg Exploration Permit exercisable by LGO at any time for 2 years, for EUR2 million payable at the date of exercise. This option maybe withdrawn by Ascent at its sole discretion so long as it has not been exercised.
LGO's rights and obligations in respect of the Switzerland Projects under the original arrangements, as previously announced, are terminated.